2. Dave Burner
Chairman and Chief Executive Officer
think more about
Contents Letter to shareholders 1
5 reasons 6
Senior management 18
Board of Directors 18
About the cover: A CAD drawing fused with a close-up of ice crystals reinforces the complexity of
Financial summary 20
de-icing – a technical challenge solved with cutting-edge technology by skilled Goodrich engineers.
Index to financials 20 Today, our IceHawk™ Ice Detection System is setting new standards in ice detection and removal.
3. Dear Shareholders, Customers and Employees:
}
These are the hallmarks of today’s
Strong financial performance
1
Goodrich – characteristics that position
Global leadership
2
us more solidly than ever to deliver
Balanced business mix
3
consistent value to our customers and
Value-creating processes
4
shareholders; reasons to think more
Innovative solutions
5
about Goodrich.
Goodrich.
Goodrich
1
A new Goodrich 2001 will be remembered as one of the most delivered record revenues and double-digit earnings per share
challenging years in the history of commercial aviation. Under growth, before special items. These accomplishments are all
extraordinary circumstances, Goodrich had strong financial per- the more remarkable in light of the sluggishness in commercial
formance because of our business mix and the underlying aviation that was developing even before the deep and immediate
strengths that have made us a global industry leader. 2001 was impact of the tragic events of September 11. Before special
also a defining year for the company as we completed the sale of items and on a continuing operations basis, which excludes the
our Performance Materials segment and announced the spin-off Engineered Industrial Products (EIP) segment, income was $306
of our Engineered Industrial Products segment to continue our million compared to $266 million last year, and earnings per
transition into a top-tier aerospace supplier. To cap more than a share rose 18 percent to $2.87 compared to $2.43 in 2000. Sales
decade of successful transformation, we also launched our new rose substantially to $4.2 billion for the year – a 13 percent
corporate identity as Goodrich Corporation. increase due to greater demand for core products and services as
This thoughtful and deliberate transition created a new well as contributions from recent acquisitions.
Goodrich distinguished by key characteristics that you will read Decisive actions Achieving these results required a swift assess-
about throughout this report – strong financial performance, ment and decisive action after the tragic events of September 11.
global leadership, a balanced business mix, value-creating For the first time in the history of our aerospace business, we
processes and innovative solutions for aerospace and beyond. faced very difficult but necessary decisions to restructure our
These are the hallmarks of today’s Goodrich – a company posi- operations in the face of reduced market demand for our
tioned more solidly than ever to deliver consistent value to our products. At the same time, we announced a $300 million share
customers and shareholders. repurchase program to demonstrate our confidence in the funda-
Strong financial performance Our ability to deliver value starts mental attractiveness and value of our businesses. We believe
with our financial results. In 2001, our aerospace businesses that our proactive approach – coupled with a balanced business
4. Letter to shareholders
2001: A year of change for Goodrich
Completed Awarded Awarded A380 Announced spin- Awarded
Rolls-Royce Trent®
sale of A380 landing evacuation systems off of Engineered
Performance gear contract contract Industrial Products 900 fan casing
Materials and sensors suite
January February March April May June July August September October November December
Acquired New name and Acquired Hella Selected to supply
Humphrey identity rolled out Aerospace landing gear, lead
Inertial Sensors Lighting business landing systems
Business integration for the
Joint Strike Fighter
mix that moderates the impact of any downturns in the commer- platforms. Over the past 24 months, we continued on this course
cial transport market – will enable us to emerge even stronger with nine acquisitions, including Raytheon’s optical systems busi-
when the economy and commercial air travel rebound. ness to enhance our growing space and surveillance platforms
and last year’s Hella Aerospace GmbH, which positions us as a
Major contract wins Tried and true strategies continued to pro-
global supplier in interior and exterior aerospace lighting. These
pel the company’s transformation during the year: targeted
businesses expand our product offerings and strengthen our posi-
acquisitions to strengthen global platforms and enhance our
tions in important markets.
business mix; innovative new product and technology develop-
Enhancing our business mix We further enhanced our business
ments; and significant wins on new aircraft programs, most
mix in 2001 with growth in the regional, business and general
notably the Airbus A380 and the Joint Strike Fighter.
aviation markets. We won three sole-source wheel and brake posi-
Our recognized technological expertise and extensive expe-
tions with Learjet and Embraer and are supplying air data and ice
rience as the leading landing gear provider for U.S. military
detection sensing systems for Dassault. Our new SkyWatch® HP
aircraft led to a major role on the Joint Strike Fighter. We’re
surveillance traffic advisory system received certification, and
proud to have been selected as the landing gear supplier and
deliveries began immediately. SmartDeck™, our fully integrated
landing systems integrator and proud to continue to play a key
primary flight display and control system, features new advanced
part in our nation’s defense.
Synthetic Vision and “Highway In The Sky” technologies for
Our series of product wins for the A380, the world’s largest
general aviation and entry-level jet aircraft.
commercial passenger aircraft, began with the body and wing
landing gear, marking our first contract to supply landing gear to Leveraging innovative solutions Innovative new technologies
Airbus. We were also selected to supply the next generation of like this are our lifeblood, and we look for ways to leverage them
evacuation systems for the aircraft, as well as the fuel delivery sys- in aerospace and beyond. Our MEMS (Micro-ElectroMechanical
tems, engine components and sensors suite for its Trent® 900 Systems) technology is just one example. Our long-term agree-
engine. With expected revenues of $3 to $4 billion over the next ment with Movaz Networks to use MEMS for optical switching
20 years, these awards establish Goodrich as a strong partner for opens a substantial new market opportunity. We expect applica-
the Airbus A380 and Rolls-Royce Trent 900 teams and position us tions for this technology to grow significantly over the next several
as one of Airbus’ largest suppliers. While forging this expanded years in both aerospace and non-aerospace markets.
relationship with Airbus, we also enhanced our position with
Value-creating processes Operational excellence and other
Boeing in an agreement that confirmed Goodrich as its exclusive
value-creating processes are also synonymous with the new
supplier of landing gear for nearly all commercial aircraft through
Goodrich. Ongoing productivity and Lean manufacturing initia-
2006, including both original equipment and spares.
tives once again contributed to operating margins at levels
Building global leadership The leadership position we enjoy today consistent with top-performing aerospace companies. We are
in landing systems – as well as aerostructures, sensor systems, particularly pleased that our aircraft evacuation systems plant in
safety systems and more – is being replicated in new areas using Phoenix, Arizona, was recognized by IndustryWeek as one of the
our proven “roadmap” formula. This formula targets complemen- top 10 plants in America for its excellence in manufacturing and
tary acquisitions and drives internal growth to build strong global process improvement.
5. We have a powerful combination of
people, products and capabilities to
continue to expand and deliver value
to customers and shareholders.
Looking ahead, we have businesses that are performing well, and factor in creating today’s Goodrich and will continue to benefit
our fundamental strategies are intact: build on our aerospace the company in the future.
base, target and create new global platforms, deliver on the prom- Committed to delivering value Above all, we must deliver value
Goodrich
ise of new products and technologies, and enter adjacent mar- to our shareholders. Management is committed to meeting or
kets. We have executed these strategies well in the past, and you exceeding expectations for earnings performance and cash flow.
can expect to see more in the future. Today’s Goodrich is well-positioned to achieve these goals as our
At the same time, managing the enterprise through this industry recovers.
3
uncertain period will be our top priority. We must be even more While we expect 2002 to be another challenging year, we
alert and responsive to changing business conditions and chal- believe our balanced business mix and rich technology base
lenging issues. We must execute our consolidation plans on time strengthen our ability to perform well. We expect to again deliver
and within budget. We will continue to enhance efficiency by financial results that are among the best in our industry, and we
expanding our success in productivity and quality improvements. are confident that Goodrich is positioned for long-term success.
Improving cash flow remains a high priority and has been inte- We have a powerful combination of people, products and capabil-
grated into our incentive plans. Our management strength and ities to continue to expand and deliver value to customers and
teamwork is more important than ever. shareholders.
We will continue to add value by supplementing our core We are proud to be part of an industry whose impact over the
aerospace business by acquiring and commercializing additional past century has made our world a better place to live, and we are
products and technologies. We will do this through our ongoing, committed to its recovery and sustained growth. We are also
successful innovation processes and acquisitions focused on proud of our contributions to the industry as a top-tier systems
adding strategic value and maintaining the quality of our earnings supplier distinguished by strong financial performance, global
and our businesses. leadership, a balanced business mix, value-creating processes
and innovative solutions for aerospace and beyond. These are the
Making people a priority To achieve all these objectives, we must
cornerstones of our success and our roadmap to greater growth
attract and retain the right people. That’s why our efforts to cre-
and opportunity in the years ahead.
ate a high-performance organization are ongoing, with training,
We sincerely appreciate our customers, our shareholders and
performance review and career development processes to devel-
our team of outstanding employees who are helping us achieve
op our people for sustained success. Our succession planning
our goals. As always, thank you for your continued support.
processes also ensure we have the talent to meet our needs now
and in the future.
We are pleased that Marshall Larsen has assumed the duties
of our top operating post as President and COO of the company.
As a proven member of our experienced management team with
David L. Burner
a reputation for delivering results, Marshall has made significant
Chairman and Chief Executive Officer
contributions to the growth of our aerospace business and to the
February 22, 2002
aerospace industry in general. His leadership has been a critical
6. Industry outlook
Marshall O. Larsen
President and Chief Operating Officer,
Goodrich Corporation
2002 Chair of AIA’s Board of Governors
Industry outlook
As the Chair of the Board of Governors of the Aerospace the terrorist attacks. We expect that these events will
Industries Association (AIA), I look forward to the mis- cause total sales to decline to $144.4 billion in 2002.
sion of renewal that will characterize our work in 2002. Increases in the military and space sectors will partially
In the aftermath of September 11, we must lead our offset expected declines for new civil transport aircraft
global industry in economic recovery and a return to due to the near-term impact of September 11 on passen-
sustained growth. ger traffic.
I am buoyed in this challenge by evidence over While recent events have affected air passenger
the past six months that the aerospace industry is travel, this is not forever. Through improvements in
standing strong in the face of terrorist acts and a safety and security, we are regaining the public’s confi-
soft economy. No other industry faced an impact so dence, and more and more people are returning to air
extreme. No other industry has responded so well. And travel every day. The AIA is playing a significant role in
no other industry has been proven to be more important stimulating this recovery. For instance, we encouraged
to the free world. Once again, we have seen U.S. air formation of the Aviation and Space Stakeholders
power at work over hostile skies. We understand that coalition where manufacturers, airlines, labor and gov-
global defense objectives and industry objectives are ernment can work together to influence a healthy future
intertwined, and we will continue to respond to our for aerospace. We will continue to champion such unity.
fullest to any threat to peace and stability. A major focus for our industry this year is sup-
port for the Commission on the Future of the U.S.
A resilient industry Our results in 2001 and our outlook
Aerospace Industry. This is an important opportunity to
for the future reflect the industry’s resilience. Aerospace
examine the political, economic and technical environ-
sales were $151 billion – the second-highest year on
ment the aerospace industry will face in the coming
record – and would have eclipsed that record if not for
7. Our industry connects, protects and helps people.
We contribute to a free world by making air transport
affordable and available, a more peaceful world by
bringing people closer together and a more exciting
world by reaching out to the frontiers of space.
Goodrich
decades, and to provide recommendations and advice tourism to the delivery of products and services around
5
on government policies necessary to maintain a robust the world. But our impact goes far beyond economics.
and prosperous industry. Our industry connects, protects and helps people. We
Other important industry issues this year include a contribute to a free world by making air transport afford-
renewed push for export control reform. Such reform is able and available, a more peaceful world by bringing
imperative if we are to continue to be commercially com- people closer together and a more exciting world by
petitive while protecting our national security interests. reaching out to the frontiers of space.
We also support the Defense Department’s acquisition I am confident that we will overcome our current
excellence program and the reduction of aerospace trade challenges with the same boldness, determination and
tensions with our European partners and competitors. courage that the aerospace industry has demonstrated
throughout history. As we work together to prepare for
Building a stronger future The AIA will do everything
the approaching centennial anniversary of our industry,
it can to help the U.S. aviation system recover from the
we must pledge to recapture the excitement of our her-
events of 2001, as well as to plan for future growth.
itage and keep our performance strong.
Developing and implementing advanced technology
into the U.S. aviation system will accelerate future civil
aviation growth. We are also determined that aviation
environmental issues must be addressed globally
through the International Civil Aviation Organization.
Marshall O. Larsen
I am optimistic that we can create a better future
President and Chief Operating Officer
for aerospace, and we must. Air transport today is the
February 22, 2002
lifeblood of our global economy – from travel and
8. Our long-term value creation roadmap
6–7% 4–5% 4–5% 3–4%
Goal:
Annually Annually of Sales Annually
Organic Complementary Innovation Productivity
Growth Acquisitions Improvement
Sales Growth Segment Operating Free Cash Flow Capital Structure
E.P.S. Growth
Margins Enhancements
10–12% 15–16% over 80% Double-digit
Goal:
Annually of Sales of Net Income
Objective: Sustainable
value creation
We are strong
1 financial performers.
Top-tier financial results. For the last five years, Goodrich has delivered: These factors contribute to financial performance that ranks among
• record earnings per share* every year averaging 26 percent growth the best in our industry, with a solid record of sustained sales and
• 8 percent average annual sales growth profit growth.
• 19 percent average annual operating income* growth A key value driver at Goodrich is our ability to successfully iden-
• 20 percent average annual return on equity* tify and integrate complementary acquisitions to increase sales and
earnings. Acquisitions completed since 2000 added approximately
*continuing operations, excluding special items
$200 million to sales in 2001. We will continue to pursue strategic
Financial performance drivers Our goal is superior returns through
acquisitions to supplement our top-line growth and broaden our
consistent, predictable revenue and income growth. Our proven track
leadership positions.
record is driven by key company strengths. As an early and aggressive
Goodrich’s long-term value-creation roadmap combines organic
participant in aerospace industry consolidation, we have established
growth, complementary acquisitions, productivity improvements and
market leadership positions with proprietary technology and prod-
investments in innovation to achieve a goal of delivering consistent
ucts that drive a strong, profitable aftermarket. Our evolution from a
earnings growth.
collection of small, component businesses to a portfolio of advanced
systems, products and services has made Goodrich a high value- Free cash flow Free cash flow is the lifeblood of our financial per-
added supplier, enjoying tier-one status with global customers. Our formance, providing the resources to support our internal growth
experienced management team has demonstrated performance in and acquisition strategies as well as dividend payments to share-
our core competencies, including excellence in product development, holders. That’s why we’ve placed increased emphasis on cash flow,
Lean manufacturing to improve productivity, and numerous initia- and our operations are focused on furthering the progress we made
tives to reduce costs. Our diverse and balanced business portfolio in 2001. Our goal is to significantly increase our free cash flow during
helps smooth industry cycles. And our management compensation 2002, and to upgrade internal processes to sustain cash conversion
program is directly linked to gains in creating shareholder value. at greater than 80 percent of net income over the long term.
9. Rick Schmidt
Senior Vice President and Chief Financial Officer
Value management: getting results
“At Goodrich, we do more than talk about creating all levels of the organization to drive both revenue and
shareholder value. We take direct actions to make it income growth.
happen,” says Rick Schmidt, Senior Vice President and An ongoing emphasis on free cash flow generation
Chief Financial Officer. “Closely aligning the interests of is also an integral part of value-based management.
our shareholders and managers is an essential element “Strong and consistent cash flow provides the financial
of our strategy. Goodrich’s Value Management program capacity to fund our growth objectives,” Rick explains.
provides direct linkage between incentive compensa- “The more cash we can generate internally, the more
tion for our approximately 335 top managers and gains resources we have to increase shareholder value
in shareholder value as measured by total shareholder through reinvestment in our port-
returns and total business return.” folio or through dividends. We’ve
{
The foundation of the value management culture committed ourselves to improving
is a set of principles, tools and measures that integrate cash flow performance throughout “Closely aligning the interests of our
Goodrich
value creation into every element of our decision- the organization. And once we shareholders and managers is an
making processes. Since implementing the program commit to a goal, it gets done.” essential element of our strategy.”
in 1999, Goodrich has integrated value management
– Rick Schmidt
into strategic and operational planning processes at
7
Earnings Sales Segment Segment
per Share* Operating Operating
(billions) 15.4%
Income* Margins*
2.87 4.2 644 16.0%
(millions)
15.4%
594
2.43
562
2.23 14.4%
3.7
506
3.6
1.93
3.5
12.1%
3.1 369
1.14
1997
1998
1999
2000
2001
1997
1998
1999
2000
2001
1997
1998
1999
2000
2001
1997
1998
1999
2000
2001
* excludes special items
10. We’re on it. ™
Commercial Aircraft Satellites
Landing Gear Optical Sensing & Detection
Wheels & Brakes Telemetry
Evacuation Systems Command & Control
Crew & Attendant Seats Power Regulation
Nacelles, Pylons, Thrust Reversers Attitude Control
Fuel Systems Health Monitoring
Military Aircraft
Aircraft Lighting
Landing Gear
Sensors
Ejection Seats
De-Icing Systems
Helicopter Engine Controls
Engine Hot Section Components
Fuel Systems
If it flies, we’re on it. Aviation Services
Helicopter Health & Usage Monitoring Systems
These are just a few
Electro-Optical Reconnaissance Systems
examples of our
Sensors
leadership positions.
2 We’re a global leader.
Landing systems. Aerostructures. Evacuation systems. Aerospace Industry leadership means thinking and acting globally to help
sensors. Aircraft lighting systems. Ejection seats. Goodrich is a global customers adapt to a rapidly changing world. To stay close to cus-
leader in all of these and more. tomers, our 19,000 aerospace employees conduct business worldwide,
At Goodrich, leadership means achieving a #1 or #2 position in with manufacturing, service and sales in some 133 locations in 20
each major market we serve. More than 35 successful acquisitions over countries. For example, to support landing gear production for the new
the past 15 years, coupled with internal growth, have created a portfo- A380 aircraft, we committed global capabilities in Cleveland, Ohio;
lio of key systems platforms to serve aerospace customers worldwide. Oakville, Ontario; Tullahoma, Tennessee; and Krosno, Poland. Final
assembly will be completed at our Toulouse, France, facility right next
A top-tier company As Goodrich grew and the aerospace industry
to the Airbus A380 assembly line.
consolidated, we joined the ranks of the top tier of global aerospace
suppliers. Our strength comes from an extensive range of integrated Creating global platforms We recently further expanded our global
proprietary products, systems and services for aircraft and engine presence with the acquisition of Hella Aerospace, a leading European
manufacturers, airlines and other aircraft operators. We are a leader lighting business. Combined with our own operations, this creates a
in the development of fully integrated systems and subsystems for new global platform in lighting systems. We will continue to add to
Boeing, Airbus and other airframe makers. We are the world’s largest our capabilities through aggressive internal development, strategic
manufacturer of landing gear and one of North America’s largest expansion and participation in the industry's consolidation to achieve
independent third-party providers of aircraft maintenance, repair and the critical mass of talent and capabilities necessary to succeed in
overhaul services. Our leading position in almost every product and today’s competitive marketplace.
service we provide makes us a sought-after strategic supplier and a At Goodrich, we know how to grow globally. We’re good at it.
valued partner for alliances and joint ventures with other leading Expect to see more.
aerospace companies.
11. Goodrich is the single-
source landing gear
supplier for nearly all
Boeing commercial aircraft.
{ “Airbus and Goodrich truly are partners
Goodrich
as we set off to build the flagship of
the 21st Century – the A380.”
– Airbus CEO Noel Forgeard
9
Brian Gora
President, Landing Gear
Landing gear strength pays off
When Goodrich merged with Coltec Industries in 1999, The Landing Gear Division operates manufacturing
the company created a full-service landing gear powerhouse facilities in Canada, Poland and the U.S. and produces land-
with enhanced capabilities and opportunities as a total sys- ing gear equipment for aircraft manufacturers around the
tems integrator. This move paid off in 2001 with $10 billion world. The division frequently locates engineers and techni-
in contract wins, including significant commercial and mili- cians at the manufacturer’s site to ensure quality production
tary landing gear awards for the Airbus A380 and and the and service. Goodrich provides a worldwide network of
Lockheed F-35 Joint Strike Fighter. landing system service centers (wheels, brakes and landing
“Our combined experience and expanded engineering gear) including locations in the U.S., U.K., Canada, Hong
and systems integration capabilities are without question Kong and Australia. These sites are key to assuring total
the reasons we won these two contracts,” commented maintenance and logistics solutions to global customers.
Brian Gora, President of Goodrich’s Landing Gear Division. Global customers. Global leadership. A global work-
“Goodrich is the strongest systems supplier for the global force. World-class manufacturing capabilities. Goodrich’s
landing gear business, supporting any aircraft manufacturer landing gear business is best in class.
anywhere in the world.”
12. Diversified market mix
18% 25% 20% 5%
Boeing Commercial Commercial Military & Space Heavy
Original Equipment Aircraft Original Equipment Airframe
Aftermarket & Aftermarket Maintenance
13% 8%
11%
Goodrich’s diversified Airbus Commercial Industrial
Regional, Business & General
Original Equipment Gas Turbines
Aviation Original Equipment
market mix helps
& Other
& Aftermarket
counterbalance cycles
in aircraft production
to assure stronger,
more consistent
financial performance.
We have a
3 balanced business mix.
Boeing commercial Airbus commercial Military
Aftermarket Regional, business and general aviation Space
13. Keeping aerospace revenues on an even keel
Aerospace original equipment revenues are traditionally Aerostructures business. “This means revenues from
cyclical as the manufacturers’ production schedules the sale of parts and services are stable and predictable
change in response to new aircraft orders. However, over a long period of time.”
about 43 percent of Goodrich sales are from the “after- Bob estimates that his division alone supports
market,” which includes spare parts and services to nearly 6,000 aircraft currently in use in the world market,
commercial airlines, military and other aircraft owners. and that the average age of those aircraft is only six
This business is driven by factors that are different years. “Goodrich made a deliberate decision to invest in
from those that affect the aircraft manufacturing cycle, the infrastructure required to support the aftermarket
most notably fleet sizes, aircraft utilization rates and early in the life cycle of our commercial programs.
equipment aging characteristics. As a result, the after- Consequently, we’ve been experiencing excellent growth.”
market helps Goodrich keep revenues on an even keel For similar reasons, Goodrich’s Aerostructures
despite normal cycles. repair and overhaul service businesses demonstrate
“As an airplane ages, it requires more services double-digit annual growth rates. The company contin-
and parts,” says Bob Gustafson, Vice President and ues to invest in its service facilities in the U.S., Asia
General Manager, Aftermarket Services of Goodrich’s and Europe to meet growing global demand.
Bob Gustafson
Vice President and General Manager,
Aftermarket Services, Aerostructures
{ “I owe my life to you guys.”
Goodrich
– Brian Udell, former U.S. Air Force pilot
on Goodrich’s ACES II
aircrew escape system
11
Growing through industry downturns is often a challenge for of the largest suppliers to both of these leaders. Boeing accounts
commercial aviation suppliers. To assure more consistent financial for 18 percent of our sales, and Airbus accounts for 13 percent – a
performance, Goodrich has purposefully diversified its product, mar- position that will grow with last year’s A380 product wins. To further
ket and customer mix to counterbalance cycles in aircraft production. insulate the company from inevitable swings in production rates,
Goodrich has built a strong commercial aircraft aftermarket, now
Diversification strategy works The wisdom of this strategy was tested
making up 25 percent of sales. The two market segments provide
and proven in the early 1990s during the previous commercial aircraft
important balance because they run on different cycles.
cycle, when Goodrich grew through the downcycle. In 2001 Goodrich
once again delivered record revenues despite a soft economy and the Varied market channels cushion revenues To further balance our
effects of September 11 on the commercial aircraft industry – which business mix, approximately 44 percent of revenues are from non-
accounts for 56 percent of sales. While Goodrich was affected, the commercial transport sectors, each of which reacts to unique growth
impact was reduced because the balance of our revenues comes from factors, including the expanding regional, business and general
a diverse range of aerospace and non-aerospace products and markets. aviation market, heavy airframe maintenance, and military, space,
Goodrich’s portfolio includes nose-to-tail participation in major industrial gas turbines and other markets – businesses that are
components, systems and services – from landing gear to evacuation expected to have continued growth through 2002 and beyond.
systems and avionics to satellite systems. This diverse product line is By building a balanced, strategic business portfolio, Goodrich
organized into four very profitable groups: Aerostructures & Aviation has become one of the most admired, diverse and best-performing
Technical Services, Landing Systems, Electronic Systems and Engine aerospace companies in the world. Underscoring our ability to grow
& Safety Systems, each of which contributes 20 percent or more of profitably on a sustained basis are our mix of products, markets and
our aerospace operating income, excluding special items. customers, the balance we have achieved between original
An important part of our business is commercial transport, equipment and aftermarket, and the exciting opportunities we have
where there are only two major manufacturers of large aircraft – in business and regional aircraft, safety systems and subsystems for
America’s Boeing and Europe’s Airbus. Fortunately, Goodrich is one spacecraft and satellites.
14. Our roadmap strategy works
Entry Complementary Acquisitions Global
Platform
Simmonds Rosemount TII Advanced Humphrey Sensor
Precision Aerospace MicroMachines Systems
1990 1993 1996 1999 2001
Gulton Data Ithaco Space Barnes Corning OCA Raytheon Satellite
We have a proven Systems Systems Engineering Optical Sys. Infrastructure
record of transform- 1997 1999 2000 2000 2000 Systems
ing acquisitions into
sophisticated systems
platforms with market
leadership. Here are
just two examples.
We have value-creating
4 processes that work.
This cross-functional
team of Goodrich
employees from the
Aircraft Wheels and
Brakes Division in
Troy, Ohio, is par-
ticipating in a Lean
Event – an event that
uses Lean continuous
improvement tools to
focus on elimination
of waste and creation
of value for the
customer.
15. Processes that create value are deeply embedded within the Goodrich a few years ago, we had $5 million in space revenues. Today our space
culture. Strategic planning, value-based management, operational revenues are $250 million and growing with products and technologies
excellence, innovation and business platform “roadmaps” are among ranging from earth, sun and star sensors that orient satellites to
the carefully defined, cultivated and executed processes that deliver optical payloads such as the Hubble Space Telescope.
value for customers and shareholders alike. Our businesses are a reflection of our strategic orientation
coupled with the strength of excellent execution on the part of our
Moving from acquisition to platform When it comes to building global
operating units. Strategic planning is a core competency at Goodrich,
platforms, for example, we have a proven record of transforming acqui-
an ongoing, living process infused into how we do business. Our
sitions into sophisticated systems platforms with market leadership.
culture of responsibility and accountability to execute strategy and
Our sensor systems platform is a prime example. Our 1990 acqui-
deliver results is embedded within each of our businesses, and in
sition of Simmonds Precision provided an entry into this market, which
each of our employees.
we quickly built upon by acquiring and developing other sensor tech-
nologies and companies, including Rosemount Aerospace, a leader in Planning and processes ensure success Processes in quality and inno-
sensing measurement technology for the aerospace industry. With vation are in place and generating significant results throughout the
the addition of MEMS technology from Advanced MicroMachines in enterprise. Lean manufacturing techniques and safety, health and envi-
1999, we created the ability to form very sophisticated micro-products, ronmental initiatives are helping the bottom line, improving customer
including “smart” sensors for a wide variety of applications. Last responsiveness and safeguarding our employees and communities.
year we enhanced our capabilities with Humphrey, which expanded the Innovation workshops that blend the best of Goodrich experience with
breadth of our product offerings and strengthened our positions in the expertise of outside resources reach deep into our organization.
military markets, such as unmanned aerial vehicles. By following our Effective strategic processes are the core competencies of
“roadmap” process, we have become the global leader in aerospace Goodrich. We organize around them, and they are integral to our cul-
sensors and other important product platforms. The same process ture. They are the keys to ongoing value creation.
enhances our offerings in new markets, such as satellite systems. Just
{
“Not a motion is wasted there. If it
isn’t good for the customer, it isn’t
Goodrich
part of the process.”
– IndustryWeek editor Patricia Panchak on
naming Goodrich’s Phoenix, Arizona, plant
one of the best in America
13
Christine Probett
President, Aircraft Interior Products
Leibert Danielson
Vice President, New Products
Computer-aided modeling revolutionized the design process
and significantly reduced development costs for the A380
evacuation slide.
Smart solutions for Airbus
If the world’s largest aircraft needs to be evacuated in system 10 percent lighter than existing slides – a critical
an emergency, critical systems must work without fail. factor for such a large aircraft,” explains Christine Probett,
No wonder Airbus turned to Goodrich, the leading global President of Aircraft Interior Products. “A passion for Lean
supplier of aircraft evacuation systems, to meet the design processes also drove operational excellence, slashing
demands for its new superjumbo jet, the A380. The task design time, improving quality and lowering costs.”
was daunting: 18 slides for each 80-foot-high twin-deck This Lean manufacturing showcase has garnered
plane – more in number and size than ever before. Six sec- national attention, recently named for the second year
onds for the slides to inflate. Ninety seconds for up to 650 as one of IndustryWeek’s “Best Plants in America.”
passengers to evacuate. Fortunately, by having the right Adds Christine: “With the Airbus order, Goodrich is
concepts, processes and technologies, Goodrich was up launching the next generation of evacuation systems. This
to the challenge. is a major strategic win for us based on our innovative
What started as a Goodrich BRITE innovation pro- technologies and our demonstrated manufacturing and
gram became a technological differentiation that drove service process excellence.”
the A380 win. “Our unique inflation device resulted in a
16. Innovations with far-reaching solutions
ACES II aircrew escape systems Recon and surveillance sensors Satellite systems SmartDeck™ avionics suite
MEMS Next generation slides Inflatable restraint systems Noise suppression systems
We’re innovators for
5 aerospace and beyond.
When temperatures drop, Goodrich goes to work. In fact, we’ve been exploration beyond normal R&D efforts. All businesses follow the
pioneering de-icing technologies since Charles Lindbergh was setting same innovation process in developing new technologies, new and
world records. Today, our next generation IceHawk™ Ice Detection improved processes, and advanced products. The Goodrich BRITE
System is raising the bar with a revolutionary approach to meeting (Breakthrough Innovation Thrust for Excellence) Program, a com-
customer needs for faster, safer, more reliable wing ice detection. petitive program for funding and managing high-risk proposals,
Applications for this infrared detection technology are being exported encourages new developments – often by multi-business collabora-
to markets outside aerospace, including potential products to make tive teams plus Goodrich Technical Centers.
roads and bridges safer. Goodrich teaches innovation as a core management and cultural
change process. More than 300 senior managers from all business
Innovation a way of life At Goodrich, breakthrough innovations like
functions are graduates of the company’s Management of Innovation
this are part of our culture. We systematically look for ways to lever-
course. We launched a new course in mid-2001 to teach creative
age our technological strengths throughout aerospace – and beyond.
problem-solving techniques, and it is a sellout.
From inflatable passenger restraints to “smart” systems for fuel
measurement, to advanced avionics, we know a lot about innovation. Driving our growth As a result of these efforts, Goodrich thinks and
And we know it must be nurtured in numerous ways. acts differently, redefining our efforts around what products do, not
Building innovation excellence is a way of life at Goodrich – an what they are. Technological developments drive major product wins
attitude and bias for action that drives everything we do. The heart of – like the landing gear and next-generation evacuation systems for
our effort is a requirement that innovation be a central part of each the A380, new technologies for satellite systems, ejection seats, noise
business unit’s strategic plan, placing the responsibility for product suppression, fire suppression, materials processing, and reconnais-
and technological development in the hands of those closest to cus- sance and surveillance systems, and new market applications for
tomers. Over the years, we have deployed a highly effective process, sensors and leading-edge technologies like MEMS. The net result? Our
based on best practices and internal development, to encourage new product and technology pipeline is the fullest it has ever been.
17. BRITE program sparks innovation
“Our goal is to develop a continuing stream of advanced explains. “The BRITE program ensures that our best ideas
products and processes,” says Dr. Jerry Lee, Goodrich’s are funded and managed to reach the market profitably.
Senior Vice President of Technology and Innovation. It has won broad acceptance throughout the company
“This requires not only incremental but also distinctive, because it produces concrete results. I am constantly
game-changing technologies, and a culture that encour- amazed at the number of great ideas we see each year.”
ages new ideas. Our innovation initiative is the catalyst An increasing number of successful BRITE projects
that helps us take giant leaps in that direction.” are collaborative efforts among different Goodrich busi-
A cornerstone of Goodrich’s innovation initiative nesses. These frequently leverage multiple Goodrich
is its BRITE program, which provides millions of dollars technologies and competencies, leading to systems
annually to business units who compete successfully for rather than components.
these resources based on the breakthrough potential and “Not all BRITE programs will succeed, and we accept
commercial promise of their ideas. that,” Jerry says. “Breakthrough projects are by definition
“Our ability to innovate and create new technologies high risk. They are intended to reshape our business in
and products is at the center of our success,” Jerry ways that can’t even be fully imagined today.”
Jerry Lee
Senior Vice President,
Technology & Innovation
{
“Goodrich has demonstrated the
technology and responsiveness we
Goodrich
need to help us meet our customers’
ever-increasing expectations for
reliability and economy...”
– Paul Carter, Managing Director of
15
Combustion Systems, Rolls-Royce plc
Mark Stier and Terence
Facy of Goodrich's
Optical and Space
Systems business stand
before a precursor to
their proposed Next-
Generation Space
Telescope mirror.
18. Chairman and CEO
Dave Burner (center)
and the Goodrich sen-
ior management team
are focused on creat-
ing shareholder value.
Seated (left to right):
Terrence G. Linnert,
Jerry S. Lee, David
L. Burner, Stephen
R. Huggins
Standing (left to right):
Marshall O. Larsen,
Ernest F. Schaub,
Ulrich R. Schmidt
We’re focused
on creating value.
Joint Strike Fighter
Strong financial performance. Global leadership. Balanced business the Space Shuttle. Commercial. Military. Regional and Business.
mix. Value-creating processes. Innovation for aerospace and beyond. General Aviation. If it flies, it’s likely a piece of us flies with it.
What does it all add up to? Think more about our balanced business mix. We have diversified
The new Goodrich. A transformed and dynamic company with products, customers and markets: landing systems, electronic sys-
seasoned and experienced management. An aerospace systems com- tems, engine and safety systems, aerostructures, technical services
pany with tier-one status, great products and solid competencies. A and more for Boeing, Airbus, Bombardier, Embraer, Cessna, GE,
company with deep roots in technology and innovation, whose prod- Rolls-Royce and others. Our attractive balance between original
ucts make the world of aviation safer and more efficient. A company equipment and aftermarket products and services allows us to con-
whose people tackle the most difficult engineering challenges imag- tinue to grow through cycles of commercial aircraft deliveries.
inable, producing systems that must perform flawlessly in extremely Think more about our value-creating processes. From “roadmap-
demanding environments where failure is never an option. A company ping,” strategic planning, Lean manufacturing, value management
focused on delivering consistent, superior shareholder value. and innovation, we have processes that have created one of the most
Think more about Goodrich. We have a strong record of financial admired, diverse and best-performing aerospace companies in the
performance, delivering record results year after year, and a spirit of world. One with deep expertise in aerospace markets, processes
achievement, confidence and aspiration to continue that success. and relationships.
Think more about our global leadership. Our world-class products Think more about our innovations. We solve customer problems
can be found on virtually every flying machine in the world, and those and make amazing things happen. Brakes that can stop almost 500
in space. From jumbo jets to stealth bombers. From helicopters to tons of metal, quickly and safely. Steerable landing gear that makes it
19. Engineered Industrial Products spin-off under way
Goodrich expects to complete the previously announced date for the distribution. EnPro’s Form 10 Registration
spin-off to shareholders of its Engineered Industrial Statement relating to the spin-off was filed with the SEC
Products business in the second quarter of 2002. This on January 29, 2002. EnPro intends to apply to list its
transaction is intended to enhance shareholder value common stock on The New York Stock Exchange. EnPro
by creating two strong publicly traded companies, each will include substantially all the assets and liabilities of the
focused on its own customers, products and markets. Engineered Industrial Products business, including the
Shareholders will receive one share in the new industrial associated asbestos liabilities and related insurance.
company, which has been named EnPro Industries, Inc., The experienced EnPro management team will be led
for every five Goodrich shares they own as of the record by Ernie Schaub as President and CEO.
Strong financial Global leadership Balanced Value-creating Innovative
Value Creation
performance business mix processes solutions
{
Goodrich
We’re on it. ™
17
Airbus A380 Gulfstream
possible for mammoth jets to turn on a dime. Innovations that save
lives, like next-generation ejection seats and evacuation slides, and
that give pilots the big picture – such as scanning the skies for
approaching storms or onrushing traffic and reading the terrain for
possible hazards.
Think more about our prospects. We have performance and poten-
tial that put Goodrich in the top tier of the aerospace industry. With
our track record of financial performance, balanced portfolio, global
business franchises, product innovation, experienced management
team and focus on creating shareholder value, the prospects for con-
tinued profitable growth are compelling.
Think more about Goodrich. We’re a company committed to being
the best and to delivering value to our shareholders, customers and
employees. We’ve charted our future, and we know how to get there.
We’ve taken the necessary actions to position our company to win.
“The Goodrich Health and Usage
We have confidence in our abilities and in the future of aerospace. It’s
Monitoring System will improve the
an industry we love and a future we’re committed to. We’re positioned
performance of military helicopters
better than ever to build on our success – and to deliver superior
and save millions of dollars for tax-
shareholder value.
payers.”
Goodrich. Think more about us.
– Senator Patrick Leahy (D-VT)
20. Senior Management Team
(pictured left to right)
David L. Burner Stephen R. Huggins
Chairman and Chief Executive Officer Senior Vice President, Strategic Resources
and Information Technology
Marshall O. Larsen
Jerry S. Lee
President and Chief Operating Officer
Senior Vice President, Technology and Innovation
Ernest F. Schaub
Terrence G. Linnert
Executive Vice President; President and Chief Operating Officer,
Engineered Industrial Products Senior Vice President, Human Resources and
Administration, General Counsel
Ulrich R. Schmidt
Senior Vice President and Chief Financial Officer
Board of Directors
David L. Burner Harris E. DeLoach, Jr.
Chairman and Chief Executive Officer President and Chief Executive Officer
Goodrich Corporation. Sonoco Products Company, a worldwide, vertically integrated
Director since 1995. (1) packaging company.
Director since 2001. (2,3)
Diane C. Creel
James J. Glasser
President and Chief Executive Officer
Earth Tech, an international consulting engineering company. Chairman Emeritus
Director since 1997. (2,5) GATX Corporation, a transportation, storage, leasing and financial
services company.
George A. Davidson, Jr. Director since 1985. (1,2,4)
Retired Chairman
William R. Holland
Dominion Resources, Inc., a natural gas and electric power
holding company. Retired Chairman
Director since 1991. (2,5) United Dominion Industries, a diversified manufacturer of propri-
etary engineered products.
Director since 1999. (2,4)
21. John J. Carmola Joseph F. Andolino
Group President, Engine & Safety Systems Vice President, Business Development
and Electronic Systems and Tax
John J. Grisik Robert D. Koney, Jr.
Group President, Landing Systems Vice President and Controller
Michael J. Piscatella Scott E. Kuechle
Group President, Aerostructures and Vice President and Treasurer
Aviation Technical Services
Alexander C. Schoch
Michael J. Leslie Vice President, Associate General Counsel and Secretary
Group President, Sealing Products
Goodrich
19
Douglas E. Olesen James R. Wilson
Retired President and Chief Executive Officer Retired Chairman, President and Chief Executive Officer
Battelle Memorial Institute, a worldwide technology organization Cordant Technologies, a leading producer of solid-propellant rocket
working for government and industry. motors and high-performance fasteners used in commercial aircraft
Director since 1996. (3,5) and industrial applications.
Director since 1997. (4,5)
Richard de J. Osborne
A. Thomas Young
Retired Chairman and Chief Executive Officer
ASARCO Incorporated, a leading producer of nonferrous metals. Retired Executive Vice President
Director since 1996. (3,4) Lockheed Martin Corporation, an aerospace and defense company.
Director since 1995. (3,5)
Alfred M. Rankin, Jr.
Chairman, President and Chief Executive Officer Committees of the Board
NACCO Industries, Inc., an operating holding company (1) Executive Committee
with interests in the mining and marketing of lignite, the (2) Compensation Committee
manufacturing and marketing of forklift trucks and the (3) Audit Review Committee
manufacturing and marketing of small household appliances. (4) Committee on Governance
Director since 1988. (1,3,5) (5) Financial Policy Committee
22. }
Index to financials
Management’s discussion and analysis 21 Consolidated statement of shareholders’ equity 43
Report of independent auditors 39 Notes to consolidated financial statements 44
Consolidated statement of income 40 Quarterly financial data 67
Consolidated balance sheet 41 Selected financial data 68
Consolidated statement of cash flows 42
Financial summary(1)
2001 2000 % Change
For the Year (in millions, except per share amounts)
Sales $ 4,185 $ 3,701 13.1 %
Segment operating income(2) $ 644 $ 594 8.5%
Segment operating margins(2) 15.4% 16.0% —
Net income(2) $ 306 $ 266 15.0 %
Cash flow from operations $ 383 $ 168 127.5 %
Free cash flow(2)(3) $ 223 $ 230 (3.0)%
Return on average shareholders’ equity (2) 23.7% 21.0% —
Net Income per Share(2)
Basic $ 2.97 $ 2.53 17.4 %
Diluted $ 2.87 $ 2.43 18.1 %
Dividends per share $ 1.10 $ 1.10 —
Shares outstanding 101.7 102.3 n/a
(1) Engineered Industrial Products and Performance Materials treated as discontinued operations.
(2) Excludes special items (see additional discussion of special items on page 25 of the accompanying annual report to shareholders).
(3) See footnote (3) on page 21 of the accompanying annual report to shareholders for the Company’s definition of free cash flow.
23. SHAREHOLDER INFORMATION
Company Headquarters Dividend Reinvestment
Goodrich Corporation Goodrich offers a Dividend Reinvestment Plan to holders of its com-
Four Coliseum Centre mon stock. For enrollment information, please contact The Bank of
2730 West Tyvola Road New York, Investor Relations Department, at 1-800-524-4458.
Charlotte, North Carolina 28217-4578
Investor Relations
704/423-7000
Securities analysts and others seeking financial information should
www.goodrich.com
contact:
Stock Exchange Listing
Paul S. Gifford
Goodrich common stock and BFGoodrich Capital cumulative quarterly
Vice President of Investor Relations
income preferred securities (QUIPS) are listed on the New York Stock
Goodrich Corporation
Exchange. Symbols: GR and GRPRA, respectively. Options to acquire
Four Coliseum Centre
the company’s common stock are traded on the Chicago Board
2730 West Tyvola Road
Options Exchange.
Charlotte, North Carolina 28217-4578
Annual Meeting 704/423-5517
The annual meeting of shareholders of Goodrich Corporation will be e-mail: investor@goodrich.com
held at the Goodrich Corporate Headquarters, Four Coliseum Centre,
To request an Annual Report, Proxy Statement, 10-K, 10-Q or quarterly
2730 West Tyvola Road, Charlotte, North Carolina on April 16, 2002 at
earnings release, visit our website at www.goodrich.com or call
10:00 A.M. The meeting notice and proxy materials were mailed to
704/423-7103. All other press releases are available on our website.
shareholders with this report.
The Goodrich Foundation
Shareholder Services
The company makes charitable contributions to nonprofit arts & cul-
If you have questions concerning your account as a shareholder, divi-
tural, civic & community, educational, and health & human services
dend payments, lost certificates and other related items, please contact
organizations through The Goodrich Foundation and our operations,
our transfer agent:
distributing $2.5 million in 2001. Foundation guidelines are available on
The Bank of New York our website, www.goodrich.com.
Shareholder Relations Dept. 11E
For more information contact:
P.O. Box 11258
The Goodrich Foundation
Church Street Station
Four Coliseum Centre
New York, N.Y. 10286-1258
2730 West Tyvola Road
1-800-524-4458
Charlotte, North Carolina 28217-4578
E-mail: shareowner-svcs@bankofny.com
Affirmative Action
The Bank of New York’s Shareholder Services website can be located at
Goodrich hires, trains, promotes, compensates and makes all
http://www.stockbny.com. Registered shareholders can access their
other employment decisions without regard to race, sex, age, religion,
account online and review account holdings, transaction history and
national origin, disability, veteran or disabled veteran status or other
check history. In addition, the site offers an extensive Q&A, instructions
protected classifications. It has affirmative action programs in place in
on the direct purchase, sale and transfer of plan shares and information
accordance with Executive Order 11246 and other federal laws and reg-
about dividend reinvestment plans. Shareholders also can download
ulations to ensure equal employment opportunity for its employees.
frequently used forms.
Forward-Looking Statements
Stock Transfer and Address Changes
This annual report contains forward-looking statements that involve
Please send certificates for transfer and address changes to:
risks and uncertainties, and actual results could differ materially from
The Bank of New York those projected in the forward-looking statements. These risks and
Receive and Deliver Dept. 11W uncertainties are detailed in the section of the Management’s
P.O. Box 11002 Discussion and Analysis entitled “Forward-Looking Information is
Church Street Station Subject to Risk and Uncertainty” and in our Annual Report on Form 10-K
New York, N.Y. 10286-1002 and other filings with the SEC.
Designed and produced by see see eye/Atlanta
24. With 2001 aerospace sales of $4.2 billion, Goodrich Corporation (NYSE: GR) is a leading
{
worldwide supplier of aerospace components, systems and services. Headquartered in
Charlotte, North Carolina, Goodrich is ranked by Fortune magazine as one of the “Most
Admired” aerospace companies and is included on Forbes magazine’s “Platinum List” of
America’s best big companies. For more information visit www.goodrich.com.
Four Coliseum Centre
2730 West Tyvola Road
Charlotte, NC 28217-4578
704.423.7000
www.goodrich.com
